Neil Warnock's side could have moved up to 13th with a win – four points ahead of 18th-placed Southampton – but were undone by a trio of superb finishes from Watford's Spanish forward and two more from Troy Deeney.
The Bluebirds – who scored a late consolation through Sol Bamba – were aggrieved not to be awarded a penalty at 1-0 down, but they can scarcely have any complaints with the result after barely laying a glove on the Hornets over the 90 minutes.
The defeat brings a run of two consecutive wins to an end and means they could end the weekend in the drop zone if the Saints get a point against Arsenal on Sunday, while Javi Gracia's side temporarily leapfrog Wolves into seventh.
Just two minutes after Ben Foster thwarted an instinctive Oumar Niasse effort, Watford forged ahead.
Deeney showed superb persistence to retain the ball on the edge of the penalty area before teeing up Deulofeu, who coolly slotted into Neil Etheridge's bottom right-hand corner from 20 yards.
The Cardiff goalkeeper got down well to palm away Deeney's powerful drive before the half-hour mark, while the hosts were denied what looked like a certain penalty when Daryl Janmaat brought down Josh Murphy in the area shortly before the interval.
Any hopes Cardiff had of getting back into the game were extinguished just after the hour as Deulofeu scored twice in two minutes.
His first came after a surging run from his own half, rounding Etheridge to coolly slot home, and he completed his hat-trick with a sumptuous chip over the Cardiff goalkeeper after Harry Arter had cheaply given the ball away in his own half.
The former Barcelona man then turned provider for Watford's fourth after 73 minutes, teeing up Deeney to slam home from 10 yards before Bamba bundled home from close range eight minutes from time.
Gracia's side had the last say, though, Deeney slotting home from Will Hughes' pull-back in stoppage time to seal a memorable away win.
What does it mean? Bluebirds run comes to an abrupt halt
Two wins on the bounce had given Cardiff renewed hope that they could claw their way to Premier League survival, but the nature of this crushing defeat will give them cause for concern as they enter the run-in. Watford, meanwhile, continue their quest to be 'the best of the rest' and look more than capable of securing what would be a superb seventh-placed finish to the campaign.
Deulofeu too hot to handle
The 24-year-old doubled his tally for the season with an accomplished hat-trick. Not content with putting Cardiff to the sword with a string of outstanding finishes, he also created Deeney's first to complete a wonderful all-round display.
A game to forget for Arter
The Cardiff midfielder looked off the pace and his sluggishness was punished after 63 minutes when his pass was intercepted by Etienne Capoue, who released Deulofeu for his third of the game.
Key Opta stats
- Gerard Deulofeu became the first Watford player to score a top-flight hat-trick since Mark Falco in October 1986.
- Cardiff manager Neil Warnock has lost his last four home league matches against Watford by an aggregate score of 16-2, with this his 16th league defeat against the Hornets – only against Reading (16) has he lost as many league matches as a manager.
- Watford scored five goals in a top-flight match for the first time since winning 5-1 against Leicester City in November 1986.
- Deulofeu became only the third player to score a Premier League hat-trick on a Friday, after Dean Windass (Bradford v Derby, April 2000) and Thierry Henry (Arsenal v Liverpool and Leeds in April 2004).
Both sides are in midweek Premier League action with Cardiff hosting Everton on Tuesday and Watford travelling to Liverpool a day later.